Inflation refers to price rise. It is the rise in the price levels of goods and services in an economy over a period of time. A measure of the rising inflation level is the inflation rate which can be measured by a change in customer price index. The effects of inflation can be positive and negative. As far as the positive effects are concerned, the central banks can adjust the nominal interest rate, which helps to mitigate recession. Among the negative effects, inflation leads to decline in the real value of money and other monetary goods over a period of time.

Barack Obama had once remarked, “And so our goal on health care is, if we can get, instead of health care costs going up 6 percent a year, it's going up at the level of inflation, maybe just slightly above inflation, we've made huge progress. And by the way, that is the single most important thing we could do in terms of reducing our deficit. That's why we did it.” The high rates of inflation are due to an excessive growth of money supply.